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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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Us 26, Carl 14, Europe 13, S&p 13, India 11, Groupon 10, China 10, Ron Johnson 10, Jim 9, U.s. 8, Washington 6, Cisco 6, John Donahoe 6, Sandy 6, Morgan Stanley 5, Geico 4, Paul Walsh 4, David Faber 4, Rick Santelli 4, Jackie Deangelis 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    November 9, 2012
    9:00 - 12:00pm EST  

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the numbers themselves are staggering. terrible decline in same store sales. revenue missed the mark. thanks for joining us. make sure you join us on monday. now it is time for "squawk on the street." one day left in what looks to be the worst week for stocks in five months. the question is, can president obama bring some opted michl when he speaks about the fiscal cliff in a few hours. good morning, welcome to "squawk on the street," tgif. i'm carl quintanilla, jim cramer, david faber is in california, jpmorgan, napa valley ceo summit. how many big stories do we have circulating? fiscal cliff concerns? you heard about jp penny concerns. right now, implied open, down 58 points. europe getting trouble,
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headlines out of greece, running low on cash again. ftse down 0.75. we'll bring in david from the west coast. we'll talk technology later on but that's not the only subject. what's coming up? >> reporter: a very cool napa valley. we are very close to silicon valley, so here at napa valley ceo technology summit we'll be joined throughout the day by a number of luminaries from the technology industry. i'll be talking to john donahoe, ceo of ebay. back to you. >> french laundry, that's the key tonight. french laundry. he's smiling like he's already been. meantime, a road map starts at cross section of wall street and washington. third weeks of losses as congressional office highlights difficulties if no fiscal cliff worked out.
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>> jcpenney shares on sale as it posts a much bigger loss and revenue miss. concerns mounting now about whether ceo ron johnson can right this ship. >> disney shares under pressure. casually optimistic about theme park business. >> groupon, one analyst slashing his down to one. the worries the president and washington lawmakers will not agree on a deal to avoid the fiscal cliff. the cbo warns if an agreement is not struck by the end. year, the u.s. economy would head back into recession, contract by half a percent in 2013. president is scheduled to make remarks on the cliff at 1 p.m. time. speaker boehner will address us. can the president say anything to make this whole week look
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like a dream? >> that's a tough one. what our lalt friend mark haines used to talk about, we need a capitulation, we need the answer, no, are you kidding? there was a congressman on "squawk" this morning say, yes, don't worry about it. when i hear that i say, no, it's not going to happen. we have to have them worry, as worried as we are. i still see this kind of grover norquist run republican party which would rather not have a tax increase and take the tit titanic down in the name of the country. >> viewers will say, wasn't wednesday a woosh? what qualifies a woosh at this point? in terms of the signs we've seen, isn't that qualified as a woosh. >> you open down and rally
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between 12 and 1. you get the 10 to 1 ratio. i'm just quoting mark haines. if you saw 20 to 1, you would say, you need to buy it. i need to see hains rules. he called too many huge bottoms using his rules. >> he had seen a few, david, as you know. i think one of the most troublesome comparisons that people are making is this fiscal cliff issue is the t.a.r.p. vote. republicans then tried to play tough. only until it was very, very late in the game did they find some religion and tried to find a way to make the bridge. >> yeah. you know, carl, i'm having a hard time hearing you so i didn't hear everything you were saying. listen, the action over the last couple of days has been somewhat surprising i think to many people. jim, you made a point to me a few days ago about what we've seen in the market overall. which is simply the simple
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mathematics of a capital gains tax increase, regardless of whether it goes up to ordinary income or simply goes from 15 to, perhaps, 20% f we do get a deal, as we all hope we will. nonetheless, it does have an impact if you see a stock going up 15% to 20%, you may choose to sell as opposed to wait and have it taxed at a higher rate. >> david, i think if we actually knew what the rate was, if we had -- is it 20, is it 23, is it 28, we would make informed decisions. right now everyone is presuming the worst. if you're going to presume the highest rate possible or a rate that is, say, 28% to 30%, it's ar arithmatic. i was going to use apple that's emotionally charged. salesforce.com, i have a basis of 80, how much does that stock have to go in order to justify me not selling? that's the problem. it's a great time to sell. you can buy it back if you want
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to. i think that's going on for a lot of taxable accounts. >> meantime getting downgrades of cisco, downgrades of disney, downgrades of 3m. big, well-capitalized, large market cap globalized companies. is that broader sentiment or something else going on? >> disney just said -- i'm listening to the call. i'm like, looking for the -- he says, we did not see strong pick up after the olympics. huh? no, no, that's got to be wrong. you did see -- that's not true. huh-uh. didn't see a strong pick up. >> part and parcel to the selloff we've seen is apple. we have to mention it because it's 4.8% of the s&p 500. huge weighting for broader indices. in terms of negative to quarter on nasdaq 100, apple is 100
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points in losses. nasdaq, 13 points to the down side on s&p, 23% of the index's loss for the quarter. this is another one, and it also fits nicely into that sell now and lock in today's tax rates as opposed to bank on next year's tax rates. >> first of all, you needed to see apple down huge at the opening again, just going back to the reflection of we need to see capitulation. this stock is climbing up. everyone says, wow, what's going on? literally, there's a story about how they have siri for autos. that's incremental. it's math. enough people have it. not only that, you bought it at 650, you can take the loss, reflect on that and cut down your capital gains bills. who knows what capital gains will be. so, the fiscal cliff, which i know many of you at home are just saying, will you stop it all right? it is about whether you should sell or not. it's about driving profits down. you know, profits when they go
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down and already not so great, what you do is you sell. if you want stocks -- last time i said, if you want stocks higher, write your congressman. >> what's alarming is people wanting to sell winners ahead of the fiscal cliff. people wanting to sell losers ahead of the tax loss. two things are sandwiching the market like that. >> linding to the nordstrom down. whole foods, wow, 8%, 300 some odd stores. good call. wow, down five. must be a bad call. the selling is in control of the thought pattern. >> let's talk about jcpenney -- oh, david, go ahead. >> i mean, i'm just curious. what is -- in terms of apple, which we obviously discuss often because we need to. what is going to turn the sentiment at this point? is it perhaps going to be when we get significant milestone numbers on the iphone 5, perhaps they've dealt with the shortage issues? i don't know. i know they're doing well in u.s. apparently, but perhaps not
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focus as much on china in terms of supply there. what's it going to be that potentially turn this is stock? >> let's go old days. you know what we need to see? preannouncement, sharply better than expected earnings. >> but they're not going to. that's not in the playbook -- >> welling we'll see. >> we're in a vacuum of information when it comes to apple. what have they traditionally done. >> playbook was not a dividend. you see ten for one split, sharply than expected number. these are things, in other words, i don't think we'll see but it's what we need. the last two quarters were horrendous but we gave them the benefit of the doubt because we had supply problems. you need them to say there's tremendous gross margin expansion. can they say these things? i doement know. it's what you need to hear. >> now let's talk about jcpen y jcpenney. massive miss for jcp. posting 93 cent share loss, well
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below consensus estimates. citing more than 26% drop in same store sales. yes, 26% drop. and higher than expected level of clearance sales. the latest setback for ceo ron johnson who was lured from apple to turn jcpenney around. hence, the two stocks collide. apple and jc. y. this is a confusing story. are they antipromotional or promotional? how can you be antipromotional when you say there's 30% off clearance item, $10 off coupon, free haircuts, there's no clear message for shoppers or investors? >> there's no reason for certain retailers to live. my mother was a salesperson at litz, my father a salesperson at gimbles. have you heard of those? >> can't say i have. >> big chains, major jobs.
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my dad dook the inventory for gaberdine pants. when you had those jobs, you had big jobs. jcpenney's feels like litz or gimbles. they used to be across the street from macy's. >> are you saying jcpenney's is going out of business? >> i'm just saying not every retailer has to live. in 1985 he had 1,000 customers, 950 were out of business by 1985. now, ron johnson may have something up his sleeve. i have to tell you something, i think the only thing he has up his sleeve is more losses. >> david, not only were gross margins a miss, comps were down by -- >> 26 -- >> and they're all -- >> carl, it's -- >> it's been asked what retailer is not growing their online
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business. jcpenney's is not. >> yeah, carl, it's shocking. i mean, that 26% decline. i don't know. jim, in your long experience, not to emphasize too much the long, nonetheless, have you ever seen a 26% same store sales decline from a major retailer in this country? not even sears in those bad days. >> mgre, 1994, 1995 before they filed bankruptcy, they had comps down 20. that's it. i can't recall another. merry go round. wow. >> ron johnson took over as ceo november 1st. since then the stock has been down 27%. that's far worse than what we've seen in the s&p 500 and retail index. >> easy question would be, does he wish he was back at apple, or -- >> has he moved to plano yet? troy aikman's house was for sale. he's talking about the sephora,
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sephora will save them. l levis, liz claiborne. i'm going to go -- i bought some trousers there, as my late mother would say, i bought trousers there when he took over, khaki pants, they were below cost. i wonder how much is sold below cost. >> are you a buyer of a target as a result of this pain or seller of -- >> i don't want to own retail. i think the north east has destroyed a lot of retail nblz. i think the numbers are awful. >> sandy and fiscal cliff, a powerful combination. >> i don't want to shop. what does that mean if i don't want to shop. >> all retailers are doomed. >> frightening concept if i don't want to shop. >> i don't believe it. i can't believe it. >> i can't seen summon taking my
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debit card -- i wanted to go to the mall -- >> if that's not enough to get lawmakers' attention, i don't know what is. >> rise above, congress. that's what that says. groupon tumbling market. missed wall street forecast. blaming weakness in europe for the shortfall. the stock has fallen more than 80% so far this year up. take a look at any metric and what you're seeing over the past three quarters there's a market decline in everything. in every important metric of its business there's a decline, including revenue growth. >> one of my favorite lines in this, what i regard as being almost a -- those remembering the dear soviet union they would put out -- soviet troops doing well in afghanistan. the best line is as discussed in our last call to understand the numbers, you have to dig below the surface. oh, okay.
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dig we must for a greater groupon? this is hilarious. this one's hilarious, have i to tell you. stalin lives! wow. i've he never seen anything other than in soviet russia to see this kind -- >> jim, jim -- >> what? david? >> is it too early to buy groupon? >> i've been debating that, and zynga. >> what is amazing, it wasn't that long ago, this company came public, marketed as a great growth stock. as melissa just said, there is no growth anywhere. it takes you back to a number of the ipos we know quite well, zynga, groupon, facebook to an extent, linkedin, this group
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never should have been public. before it went public they did that final round, raised $900 million and google was willing to pay them $6 billion for that company but they wouldn't pay it now. >> wow, wow. >> unbelievable. josh brown, frequent guest on "the halftime" today said they have destroyed 10 billion of a $12 billion original cap. this ipo was a war crime. >> a war crime? >> invokes nuremberg. >> have you mentioned, evercore going to $2 price target -- >> he starts by saying we missed our revenue expectations by meeting our operating profitability? wow. meeting what? meeting what? fiscal cliff. >> here on "squawk on the street" interviews with the interviews of priceline and diagio making a $2 million bet
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on india. one more look at futures, once again, negative actions here. we'll see how we close out this crazy week.
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a few travel websites are hooking up.
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priceline going to buy kayak working out to $1.8 billion. it comes just about four months after kayak went public. priceline ceo jeffrey boyd will discuss the deal exclusively on "squawk on the street" at 11 a.m. eastern time. this is a tricky deal, jim, because kayak makes money by referring to the likes of a priceline and expedia. now priceline doesn't have to pay as much to be referred because it owns kayak and can make money off kayak referring to rivals like expedia. >> i thought it was kind of a dazzling move. these sites are very, very powerful, it's the way people travel. kayak doesn't look like a great site but it is very powerful way for people to be able to find out the best price move. hotels.com, priceline. i know priceline is looking down, apparently, but this was smart. >> you chase orbitz and try to
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find out who's next? >> this is a powerful combination, i think it could hurt everybody. >> the only knock on the deal, it was 54% premium from the ipo price which happened four months ago. could priceline have made a bid before and, of course, it could have. >> yes. i think that this was one where you -- it's the opposite of google and groupon. they had the shot to buy it. i know kayak because of the inn i co-own. this is the way people come to the inn. it's the way foreigners come to the inn. we have dutch people, belgians, they go through kayak. it's like the united nations, a good united nations, don't get me wrong. >> without the ahmadinejad -- >> it's another charged nation, apple -- >> this has the added tail wind
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with a holiday season that looks heavily booked. hotel roochlz, airplane seats, good luck trying to travel this christmas. >> i don't know. maybe people aren't stuck in the funk we are in this part of the country. >> maybe. all right. well, last night on "mad money" cramer tried to help you wrap your head around the two-day selloff. jim's mad dash is up next. later o the company that makes brand like guinness and captain morgan making a big bet on india. we'll have a first on cnbc interview. nasdaq looking to make a gain, up by 1.5%. s&p and dow pointing to a lower implied open. i'm only in my 60's... i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses.
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five minutes to the bell. cramer's mad dash. a lot of discussion about disney. tv fundamentals are stalling, parks having new projects that aren't making up for better capacity. >> i think you buy this stock, 46, 47. one thinking iger said, we're transitioning out of an investment mode into a more compelling growth mode. they have very difficult comparisons because of cars 2 last year, lion king. they did mention there's no big blockbuster. he cited nbc for having "the voice" is what can happen with a blockbust blockbuster. don't write off tv. he gave props to our network.
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they will have a big movie. lucas films -- if you don't own disney stock, maybe this is an entry point. >> you got the same feeling on cisco downgrade? >> not at all. cisco has enterprise. this was a capitulation downgrade. well, here, here -- i can't take anymore! i can't take it anymore! that's what goes on in a research department. it's easy to say, i can't, i get up every morning, i can't take cisco. on a yield basis maybe, yield basis is soft, government is soft and he's worried about chambers, the ceo, saying business isn't that good. this is what i call the classic, i can't take it anymore downgrade. >> i wonder if they really talk like that -- >> oh, my god, i can't take it anymore. >> when we come back, 45 shopping days till christmas. what kind of holiday season is ebay expecting? we'll talk to john donahoe. what a week it's been. will it end on a bullish note.
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and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.
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there is the opening bell on this friday. logistics partners celebrating ipo. washington federal, largest bank headquartersed in the pacific northwest. coming off our biggest two-day loss since halloween last year. since tuesday, u.s. stocks have lost $600 billion in market cap. a rough couple of days. we'll see what today brings. >> my trust bought a little stock yesterday. it's getting very negative. i mentioned disney as being a high quality stock, you get a shot at. remember, starbucks went from 52 to 43 and everybody hated it at 52, delivered a number. expectations being lowered for a lot of people in the market. i don't think you run from the market but you pick your spots.
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dividend yields are adjusting. ones that are three are going to four. suddenly more attractive neen a fiscal cliff situation. >> i know you like to look at individual names but 200-day moving average talk which normally delynn yats short term from long term trends. how important to you? >> it was never that important to me as an investor because i like the stocks to go my way in a pired my style. traders, obviously, focus -- >> speaking of stocks breaking important milestones, groupon opens down 23% -- 23.5%, new low on groupon, shares $2.9 9. stunning drop here. >> we'll talk groupon. steve liesman. >> an interagency release from banking regulators saying the new basel 3 capital rules will not take effect january 2013 as originally scheduled.
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saying they're delaying these new capital rules because of industry concerns that have been expressed in the period that began over the summer. they expressed concerns over the complexities of the rules and timetable for implementing them. january '13 is the suggest the timeline from basel. the federal reserve and the fdic saying that they fully intend to implement these rules. so, it's not necessarily a reprieve, just a period of time when they don't have to have them implemented. these capital rules, i believe, are still on the way to being implemented. >> jamie dimon, who's on this afternoon at 4:00, this is not enough to get him to do any cartwheels? >> no. i'm not sure what it would take to get jamie dimon to do cartwheels, but this is definitely not it. >> morgan stanley out with a fresh note saying deal fatigue is evident.
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active customers year over year, 45% growth, purchase deals year over year, 9% growth. you get a larger base -- >> he this were a copyrighting company, supposed to send you to the brazilian wax, which has been hurt by the storm, you never know. maybe you don't want to get a brazilian wax. i'm tired of that offer. what is it? >> how many brazilians can you get? >> what is it? is it like a brazilian nut? >> no, it's not. >> oh, okay. >> i'm familiar with -- >> let's not talk about waxes at 9:30 in the morning. honestly. >> beeswax, man. >> stocks, netflix up, we spoke to carl last night, and i
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specifically asked if he would go hostile on the company. he seemed to say no. he said the thought has crossed my mind but it seems like it would be a very difficult thing to embark upon in a very difficult battle to actually win. whether or not he could launch a bid to put the company in play, that's another story. this is all, of course, to some degree a game of gamesmanship, brinksmanship in terms of if he's locked into the poison bill and he's got just the 10% stake. being hostile could be a way of shaking out the third-party bid. he says the thought has crossed my mind. the stock is higher today. session up by more than 2% at this hour on a downday overall for the markets. >> interesting. >> when you listen to the media calls, they're mentioned as a factor, make money for a lot of the media companies. i have too much respect for carl icahn to say, he doesn't know what he's talking about.
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too many people still love netflix. >> david? >> no, fair point. i mean, he's extraordinarily bright man in many ways. but don't forget time warner, don't forget yahoo!. it wasn't clear that he had any great strategies in any of those names, jim, that somehow they were going to do something different than they had been doing before. he saw opportunity. he saw potential as a poker player, as he often defines himself, to create an opportunity in some way that would be advantageous. neither one of those situations did it work out particularly well. >> no. you have to find someone to buy it. >> right. >> amazon wants to crush it. >> you have to shake them off the sidelines. david, i think the point about calling him a poker player is very apt in this situation. was he saying this was an unwinnable battle because that's his game of poker? we'll have to see how the events unfold. this is an interesting and developing story as we see the stock fluctuate based on all the different headlines crossing.
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>> i was thinking more bridge. i think his hand is too no trump. >> if i played bridge, i might be able to respond to that. is there a go fish analogy? >> it's a two, three, seven, nine, jack. hard to pull. hard to pull. >> my grandmother played bridge. >> bridge is an underrated game. >> lionscape up 9%. a blowout quarter. really, just blew past expectations on the strength of home release of the first "hunger games" series. of course, this is pre"breaking down" release next week. >> red dawn? >> red dawn? >> yeah, that's the remake. >> does anyone remember the original one. holy cow. man, go wolverines. what a great movie. people forget harrington stanton. >> david, reuters seems to think they know what richard schultz is going to offer for best buy
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in december. they think it's going to be less than the original bid. starting to look at which private equity players are with him and which are not. your thoughts? >> you know, i checked in on that earlier this week, carl. at least based on a couple of phone calls. and i wouldn't say that i did an enormous amount of reporting. i think we'll have to wait until after thanksgiving, is the sense i got. don't forget, look at that stock. they were talking, what, 25 or above. you know, why would you offer that kind of a premium when the stock has fallen so dramatically since this first began? even with the idea that it would be a lower number, which does make some sense, one would imagine, nonetheless, you're still talking about a $3 billion equity check. now, a lot of that -- at least half, perhaps, going to come from mr. schultz himself as he moves his equity over. raising $1.5 billion from private equity, let's call it, is still a very, very big problem, or at least let's call it a tough thing to do.
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a tough thing to do, given what's going on with that retailer. >> get that radio shack merging with best buy, jcpenney, together with groupon -- >> if you tie a bunch of rocks together, they'll float. >> dumb as a bag of hammer as i look at that possible leverage buyout. >> mary thompson is in for bob this morning with more on what is moving. >> we have a mixed picture in the markets right now. dow coming off the lows of the day, down 26. nasdaq is higher, up 1 1/2 points, rebounding from a lower open help by strength in semiconductors. you can credit that with invideo raised dividends. traders concerned about two things. what's happening in the eurozone and what will happen with the fiscal cliff. let's start with the eurozone first. take a look at the chart of the euro. 7:30, another leg down, added pressure on the futures. recent concerns about france going into a recession. what happens with greece? there is a vote on the budget on sunday.
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of course, traders are focused on what the president will have to say at 1:00 eastern time when he talks about the economy and fiscal cliff. i asked him, what are you hoping to hear? what do you think he can say to actually help the markets? one trader says any sign he's willing to compromise or suggest something, that would be good. another trader saying, you know what, actions speak louder than words. we've heard enough talk over the last year or so. we need to get something done so he believes it will be a nonevent. all of this happening, though, at a time when traders say the markets look technically vulnerable. the reason is yesterday we had the s&p 500 break below the 200 day moving average. carl mentioned that earlier. this, of course, would suggest if it continues and we see heavy volume could mean a lower move for another leg down for the s&p. one trader pointing out, we dropped below it back in june. it bounced back. a better analogy would be to look and see how the s&p performed in august of 2011 when we had the debt downgrade happening. at that point it dropped below the 200-day moving average and dropped another 13.2%. traders kerpd about the
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technical position of the market right now. lastly, i want to point out one other thing they're talking about, the china numbers have been better than expected. raising concerns. we aren't going to see any added stimulus in that country. they say that could be a negative for the markets, too. jim, back to you. >> thank you, mary. the markets not complying with our bearish -- >> half of the losses on the dow are disney. disney alone. >> i mean, friday's a tough day. everyone's very tired. look, if something good happens, it goes like a rocket. i just can't see anything good happening yet. let's head to the pits, rick santelli at the cme in chicago. >> sometimes the best charts to look at are two-day chart. two-day chart of tens. rates popped up a bit. about an hour ago. but they also touch 157 before they popped. so if you open the chart up to the end of august, we are hovering at basically two-month low yields. bunds, two months is the wild timeline because they're roughly
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at two-month lows. you look at the euro, it's roughly at two-month lows so the correlation argument is alive and well. today we still have some more important data. import prices ramped up, especially when you look at a rate of change perspective. if you look at what's going on in front of university of michigan, i know confidence is important. but remember, rise above. i don't know that this confidence numbers can reflect some anxieties. on the santelli exchange and throughout the day, i'm going to be talking not only about rising above but, hey, let's move out of the box. let's move out of the comfort zone. maybe offer some suggestions. jim cramer, back to you. >> you're right. maybe constructive thoughts. . let's check out latest moves in energies and metals. i don't know if gold going up is good. >> let's look at oil first because oil is basically unchanged from where it was yesterday at the close. not much has changed in terms of what traders are paying
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attention to. they're looking, as mary mentioned, at the fiscal cliff and worries over that as well as worries over what's happening in europe. that's weighing on the market. even the positive data out of china was not enough to boost crude oil prices. the part of the energy sector seeing some momentum, it's gasoline futures. today gasoline rationing has hit new york city. mayor bloomberg putting that into effect. can you only fill up on every other day based on your license plate number so that's something traders are talking about as well because many traders here on this floor are affected by that. we're also looking at gold prices at a tree-week high. it may not be a good thing because it's a safe haven bid. tradesers worried about the fiscal cliff. also thinking maybe we'll see more accommodative policy, another reason to bid up gold. we're seeing new buyers coming into the gold market. they're also looking at activity in the gold etfs which have been strong. looking at gold prices perhaps making that march back to the 1800 level. back to you.
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>> thank you, sharon epperson. jcpenney is at a crossroads, big earnings miss, two weeks before black friday. is time running out for ceo ron johnson? diageo, paul walsh, expanding their presence in india. early movers on wall street, igt up 4.5%.
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take a look at the dow heat map. disney leading laggard down by 5%. green there, microsoft making a big move. top left hand corner of your screen. that corner there. it is higher, though, right now by 1.25%. >> yeah. looking for -- for various reasons. big time of the year for video games. halo gets talked about a lot this week. we'll see if we can get clarity. we haven't talked much about china. what a coincidence on the second
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day of their communist party congress we get great numbers on industrial production, on retail sales, on fixed as set investment. shanghai doesn't like it. maybe stimulus less likely? >> as soon as great numbers came out, china fell on great numbers. i think the chinese government wants to get employment back. they want to be able -- they really want to get gross domestic -- the chinese buyers of stocks may be underrating the firepower of the chinese government. i want to go with china not against it. buy china index, fxi. want to be contrary to the bears, contrary. they got -- that government is very powerful and very smart. everything's communist, by the way. the supreme court, papers, i mean, it is very orwell. it's not like the communist party in the '70s. >> you need net plus, better than the alternative --
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>> are we too gloomy? >> are we too gloomy? >> i mean -- >> the news -- we're going to know in about four hours, right -- three, four hours when the president speaks. boehner has put his flag in the sand for now, last night comments. but people i don't think have a good idea what tone the president will take. >> i mean, jim, we have to be -- you have to be gloomy to some extent. if you're an investor or trader in the market, have you to think about the worst case scenario and position yourself. you don't think about the best case scene arizo scenario align like that. >> transports go green right now. i'm trying to rationalize negativity with indices you come on the show and -- >> that's true. >> i just want to try to -- you came in this morning and the gloom was very thick. it wasn't thick on tuesday. i see many bad things happening. i see numbers way too high. i see a company like whole foods reporting a fantastic number and stock can't get any footing.
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do you buy that stock at 80 knowing it gets a 26 multiple or keep selling? i'm saying, put your shopping list together, that's all i'm saying. if we get a miracle out of washington, do you think we'll be sitting here saying, wow, sell whole foods? >> news out of washington will carry the markets higher or push them lower. it's fewer stock-specific stories when you're dealing with a macro issue like the fiscal cliff. >> i puzzle over, why aren't we -- often times i say, okay, why aren't we down big? is it the china news? is it the fact that maybe we're too hopeful the president will say something? we're not down big. it's early yet. but i always like to -- i don't like to just say -- i didn't find a lot of people coming out saying, buy disney. what, is he an idiot? at 51 everyone loved disney. >> two tweekz to go until black friday. what is the mood of the american consumer? minutes away from breaking news on consumer sentiment. rick will bring us that. first, cramer will reel off his
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welcome to the world leader in derivatives. welcome to superderivatives.
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let's get six stocks in 60 sikdz with jim. drones? >> lion tech, we deal in lead, great competitors. they say bullets are selling well. abav, drones which we feel military wants more, they say fewer bought. >> interesting. barclays like holly frontier. >> i like refiners, a lot of oil. >> we'll talk to diageo next hour. >> do you know the indian market is the biggest whisky drinking market in the world? bril yat move by diageo. >> marathon? >> eagle for assets. i like this call. >> we didn't do enough on
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invidia. >> that's graphics for video chips. >> zipcar -- >> this company disappointed, disappointed. we need a little chart -- i'm sorry to crowd your space there. right here is when things got so negative you went up. that's how a bottom is formed. >> all right. 16% move there. we got about 45 seconds to talk about -- >> i'm so excited. >> yeah, tonight is big. >> salute to veterans on the show. this is important. we do it every single year, november 11th. well, because of veterans day. fabulous piece in "new york" magazine, we're going to thank him for his work. america didn't. i think he's a miracle worker. i'm going to ask him about sandy. how are the losses of sandy? initially he said things aren't that bad. and about the resurrection of a company that had been left for dead, done by this man, and i think he's a hero of our country. >> army lieutenant in the
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vietnam war. >> korean. i think he deserves and commands respect. we'll give it to him. and we also have the west point investment club. >> i can't wait for that. let's get to rick and get sentiment numbers. >> holy cow! 84.9. 84.9! why a holy cow? because 82.6, the last look we had was the highest since of fall of '07. 84.9 pushes the envelope to -- going back to july of '07 when it was 90.4. but, caution, asterisk. this is a preliminary november read. all the historical comps i'm talking about are the final reads. it doesn't diminish the fact this is powerful. is this reflecting anxieties, post-election on the fiscal cliff? probably not. anybody who doesn't think there's anxieties there, just pull out your s&p chart. we still have wholesale
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inventories in about five minutes. back to you. >> rick, interesting stuff. we're trying to digest that number here ourselves. >> head scratcher. >> barring a big revision since '07 -- >> happy days were here again in '07. unemployment of 5%. >> and we have had the likes of hodges saying pay more attention to sentiment numbers because sandy disrupts -- >> jim, we'll see you tonight at "mad money." live interviews right here on "squawk on the street."
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welcome back to "squawk on the street" in about 30 second we get wholesale inventories. it's always important and possible revisions on third quarter gdp. that could be predicated on inventory movement. let's face it, this is a third quarter number. here we are in the fourth quarter with a fresh set of issues to con send with. when we looked at consumer confidence levels we haven't seen since july of '07 that were just released, if you look at the charts, yes, we've seen a half hour bit of a rally off the
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lows and equities but little was predicated on that release which is somewhat surprising. it underscores fiscal cliff issues in the marketplace. septemberember inventories. over double expected rise. we're looking for anywhere from 0.4%, up 1.1%. last month we saw the same drift, originally released august, now up 0.8. we see more inventories. you analysts start factoring in third quarter gdps. >> thank you very much. rick santelli, not too much reaction in the markets either on inventories number or preliminary michigan sentiment. let's take a look at where we stand here. hugging flat line on s&p 500 and the nasdaq. the dow really feeling the weight of shares of disney down 5.7% at this hour on the nasdaq the weight is apple, continued lower down by 0.3%. let's get to the road map for the next hour. >> ron johnson, retailers on
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sale, jcpenney posting a much bigger loss, revenue miss in third quarter. so is sometime running out for johnson's turn-around efforts? >> and shares of groupon opening at new all-time low this morning as analysts begin to pile-on with the downgrades. is the groupon growth story over for good? >> a rough week for major indices as concern over looming fiscal cliff weighs. morgan stanley says there are not one but four key reasons to stay bullish. we'll talk to the strategist behind that call in a few minutes. >> and david faber joins us live from napa valley's ceo tech summit for an exclusive interview with ebay ceo john donahoe. jcpenney taking a hit after reporting a quarterly loss of 93 cents a share. higher than expected level of clearance sales. matthew boss is a retail analyst at jpmorgan has an overweight reade rating on jcpenney.
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good to have you back. good morning. >> good morning. >> i'm looking at a note from september. words like productivity encouraging, transformation under way. you feel the same this morning or not? >> you know, the results this morning were clearly horrific. same store sales down 26, earnings down 93 cents. you know, not much positive to talk about. you know, i think the commentary on the shop and shops remains somewhat encouraging. i think the biggest change today was hearing that ron johnson's willing to be flexible with strategy. in terms with black friday, some promotions he's talking about for december. >> how does that alter your view? how does it alter your target, your rating? >> our estimates and our price target are up for review here, but, you know, i think the big question remains is into next year. i think holiday here for 4q, you know, it's hard to imagine a scenario where sales are better
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in 4q than they were through the first three quarters of this year into next year. you know, the question will be, in light of these comparisons, can they comp positive? i think the first half of the year, thinking about a positive comp is probably a tough scenario. i think when the shops become roughly 40% of the mix by the second half, i think that's their opportunity, is can they stabilize in the front half of next year and actually move back to growth in the back half. >> right. matt, you have got an overweight rating on the stock. you said your view is under review. i'm not going to press you too much on that. can you possibly even have a buy rating on a stock that just posted clearly horrific results? i'm trying to get at, are there any glimmers of hope laid out? because from a shopper standpoint, from an investor standpoint, it seems like ron johnson's strategy changes with the direction of the wind. first of all, he's not -- he doesn't have promotions, doesn't like promotions, wants to move away from promotions, and then
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30% off clearance items, coupons, free haircuts, family photographs. there's no clear direction here for this company whatsoever. can you get your arms around it? >> right. a couple things. i do think the stores are moving forward. so, when you do visit the stores and you're in the malls this year versus last year, i think that the inventory's cleaner. they're less cluttered. i do think that the brands in some of the product they're bringing in is improved on a year-over-year basis. that part is only getting. i think that's the underlying core here. i think that the pricing structure, going up against greater promotion, is tougher as they move forward and probably substantially tougher in the fourth quarter. you know, fif i look across retailer, one retailer that does it well is dillard's. they eliminated the layered discounting back in late 2008. they went through almost two years of pain but they came out
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of it. now they've posted nine consecutive quarters of positive comps. you know, i think one thing is ron is changing and tweaking the strategy, but they've yet to say they will be procemoting on ful price goods. it's clearance, permanent markdowns. i think that's the big -- that is one thing that hasn't changed and one thing we're waiting and monitoring. >> but your one glimmer of hope is based on if you build it, they will come. they improve the stores enough, clean up inventory, shoppers will return. they haven't lost the shopper permanently to like a macy's, which has picked up on jcpenney's woes. >> i think the key is vendors. the key is, do they continue to pick up vendors or does this become a self-fulfilling prophecy of neglects ive same store sales, strategy not working and vendors pull out. thus far vendors seems behind it, levi's, izod.
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as a result, their results are working. you know, the key is stabilizing the core. the other 90% of the store which moves to 60 over time. that's the key to the overall results. if they continue to work and pick up vendors, then the overall store moves forward and i think the story can work. question is the timing. >> yeah. and, matt, last question here. i mean, if it is a second half '13 story, is cash a legitimate concern here? people are starting to look more and more to that. >> the cash on hand with 1.5 revol revolver, 800 to 850 in cap ex this year. i think the cash is okay right now. 3q is highest seasonal key quarter. inventories are clean, down 23%. that was probably the silver lining in the quarter, is despite sales, i think they'd have a much bigger problem if you told me the inventories were bloated. that doesn't seem to be the case. i do think the balance sheet is
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okay at this point. clearly, if you get into the front half of 2013 and you're running sales like you are today, that's going to be a much bigger problem. then i do think the balance sheet and liquidity will come into question. >> matt, good stuff. thanks so much for your guidance. >> thanks for having me. >> matt rose at jpmorgan. >> the other earnings miss this morning, groupon, shares tanking after missing third quarter, setting new low on the stock. aaron kessler from raymond james. good to speak with you. prior to the earnings release you said you expected seasonal slowness. this has to be much more than seasonal. >> we were expecting a 4% sequential decline in local business. that was obviously down about 16% year-over-year. the u.s. sustained 23% on sigh quen shall basis. much worse than expected. appears to be from consumer fatigue setting in at this point. >> every metric we look at has
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been in decline for three quarters. revenue growth, gross billings. are there glimmers of hope here? is this -- should this be a $2 stock in a year? >> yes, i think it depends on one, what happens with the local business, as you say that's been in decline the last few quarters. in q4 they are seeing seasonal strength. every business line will be up sequentially in q4. the other thing they're trying to transition to is more market model. if you look at new york and chicago, they have over 1,000 deals instead of just a dozen deals on a given day. that's the future of the model they're headed towards and we'll have to watch that. >> let me go back to something you said and that is sequential improvement, quarter on quarter improvement in fourth quarter every line? >> that's what they guided to. local business, international as well as the goods business, growing fast, they're expecting all businesses to be up sequentially in q4. >> is a fourth quarter
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seasonally weak or strong? >> e-commerce is generally seasonally strong but groupon is such a new model, whether that fits into your typical e-commerce category. the goods business, whether the local business is e-commerce is a little tougher to say. we'll have to watch q4 but you should see a seasonal lift in q4. >> are you beginning to consider alternative scenarios where this becomes a target of sorts for, i don't know, an amazon which has its own issues, and living social, but who would want to take a gander at these guys? >> obviously, a lot of companies did try. google tried to acquire groupon about a year ago as well as azon acquired a stake in living social but i think the growth in the space has been weaker than expected. i think at this point, until we see stabilization, i think companies will wait on the sidelines. >> in terms of the noise for the quarter, there is confusion about direct deals and impact on margins. can you walk us through that.
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how concerned should we be on that front? can we actually dismiss this issue as being sort of an accounting wonky issue? >> if you look at direct business, merchant of record, gross margins closer to maybe in the 15% to 20% range versus 85% to 90% gross margins in the core local business. essentially you're trading high margin business with the local business for lower margin business. goods is growing faster but coming at a much lower margin. the operating margins are about high single digit for goods business compared to 25% to 30% for local business. investors definitely want to see faster growth in local business as opposed to goods at this point. >> and just be clear, aaron, what's your price target on this stock? >> no price target but we have a market perform rating. >> aaron, thanks for your time. aaron kessler joining us on the newsline. jp morgan paying host to napa valley tech summit. david faber joins us with john
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donahoe. we'll find out how mobile is changing the way merchants approach the holiday season. >> wait until you hear from priceline's president and ceo, jeffrey boyd, the day after the company announced it's buying kayak software for 29% premium. a cnbc exclusive ahead.
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it looks like we have the beginning of what could be a turn-around in the markets. that happened in the last 15
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minutes or so. technology, financials and energy turn into the green. consumer discretionary, still await on overall market, down 0.4% with retailers and home markets a drag. so far all arrows up so far. >> biggest names in tech are gathering in napa valley. jpmorgan's annual ceo technology summit. david faber is there with an exclusive interview of the ebay ceo. >> john donahoe is here with us. we can still see our breath. it's cold in the napa valley but nice to see the sun coming up. nice to have you here. not far from san jose, where headquarters is. many credit you with the significant turn-around, particularly when they look at the marketplace business. let's take it right here, right now for the investor at home. a lot of people thinking about europe. you have more than half your sales, i believe, are overseas and certainly european important
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market. what are you seeing there? >> what's interesting about europe is there's a lot of economic uncertainty, obviously. gdp growth rates, retail growth rates. if there's a bright spot in europe, it's what technology's doing. e-commerce growth rates across europe continue to be double digit. uk's 15%. germany, 14% italy's 20%. spain's 20%. what's happening is as european consumers are looking to stretch their euro, they're coming online to get lower prices. not just ebay, everywhere. >> across the board? >> across the board. >> new adoption on their part or going there prurly for price comparison? >> a little of both. they get better selection and better prices. we're seeing a lot of new europeans -- or europance who may be out of work or struggling, now starting to sell online, too. it's creating economic opportunity for them. so, it's -- europe's got a lot of challenges ahead of it, but
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the e-commerce and the internet and mobile is offering opportunities that haven't been there before. >> when we see economic growth declining in much of europe, whether it be spain or potentially italy or even now concerns about germany where you have an important business, you're not seeing it in your business? >> we're fortunate to be e-commerce, so, no, we're not. we're seeing pretty strong growth across europe. >> how are things here in the u.s.? let's talk mobile. we talk about it to often during our program, this transition to mobile that so many companies are trying to effectively manage. how are you approaching it? i know it's more and more not just component but focus, certainly, for how you do your business. >> as you know, we bet strong on mobile several years ago. that's been paying off. we have over 100 million downloads of ebay mobile apps, over $10 billion mobile. we monetize the same on mobile as web. we have no concerns. we're full speed ahead on that.
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i think the interesting thing is how consumers are now making this mobile device the central navigation system of their lives. while it's driving great mobile results for us, it's also -- i think the coming year is going to be the year where the mobile device links digital world to the physical world. i'll give you an example. we've been working with macy's on a black friday mobile app that's just coming out where their consumers can shop in the store they want to go to on black friday and find deals ahead of time. and what macy's loves about it is it gets their consumer, because of a mobile app, to come into the store. so mobile's that bridge between online and offline. i think you'll see an explosion of innovation around how that can help retailers. >> how far along are we in that explosion you just described? give me an example, perhaps. >> well, i think we're at the beginning of the explosion. in our company going from $500
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billion e-commerce to the $10 trillion retail market. because consumers when they shop now, are over half of retail transactions, consumers access to web at some point in their shopping experience. think about your shopping or my shopping. at some point we went online, checked where we were going to shop. maybe did price comparisons. we're increasingly doing that on our mobile device, looking up reviews, guides. mobile is enabling new experiences. for example, on paypal, you use paypal here, you go on the local tab, you can tell a retailer that accepts paypal here that you're coming. when you come in, they can give you personalized service. because they'll have your name and picture when you walk in and they'll say, david, great to see you. you bought in last week. can we give you -- can we help with you with this this week? they can create customized, personal service which is something people used to do on main street, and then big box retailers came in and it became
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inpersonal. now mobile can help retailers build more of a relationship with customers. >> as a company that has to buy a lot of search terms and do a lot of advertising, in a sense, to get people to use the service, do you feel comfortable on mobile? are you perhaps better situated than others are? we hear it's not as easy to go from a four inch screen to nine inch screen. >> we monetize the same on mobile as the web. we're not advertising based. we're a transaction based mondayization. we've been blessed that way. the design elements, yeah, we invest a lot in design. our iphone mobile app is different from android mobile app which is different from windows app. have you to optimize the user experience for the specific device and the specific operating system. >> you know, for some time particularly when the stock wasn't doing quite as well as there has been, there was
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chatter it would be great if they could spin off paypal. that has died down. was that ever an option? does it still remain an option? do you believe it's intrinsic to the business overall? >> i'm a big believer, do what's right for customers and shareholders. where there's real synergies, you capitalize. we sold skype. skype was a great business but i couldn't see synergies between skype and ebay. with ebay and paypal, the synergies is strong. mobile, what retailers are telling us is they don't just want paypal for payments, they want paypal to be a platform, if you will, that allows them to drive volume, drive incremental traffic into their stores, so ebay can help them do that. the synergies are growing between the two businesses as this line between online and offline blurs. >> and finally it's a high-class problem. your company has been generating
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a good amount of cash. correct me if i'm wrong, $7.5 billion or so. what are you going to do with it? >> well, we're trying to put it under a mattress so it's safe. >> but it's not apple's position but still a lot, especially given your market. >> the particular part about our business is we do have a strong cash entering business and a strong balance sheet. the majority of our cash, however, is outside the u.s. our ability to do anything in terms of dividends or stock buybacks is not a practical alternative. >> there was a tax holiday, would you consider bringing it back in some fashion? >> sure, absolutely. absolutely. >> what would you use it for if you did that? >> we have a very clear capital strategy. we first invest in organic growth. we look for acquisitions. you know, we've bought 20 companies over the last couple of years. but we try to be pretty disciplined about that. and then, you know, if we have cash remaining we will -- we buy back stock to offset delusiiffi.
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if we had that opportunity, we would evaluate it again. >> you got a pretty good currency to use on your stock price. john donahoe, thank you very much. >> great to be here. >> back to you. >> thank you. the company behind brands like johnny walker, guinness, and many more making a big bet on india. find out more when diageo ceo joins us for a first on cnbc interview. morgan stanley says there are still four key reasons to remain bullish. had to be slow.aid an t or that printing in color had to cost a fortune. nobody said an all-in-one had to be bulky. or that you had to print from your desk. at least, nobody said it to us. introducing the business smart inkjet all-in-one series from brother. easy to use, it's the ultimate combination of speed, small size, and low-cost printing.
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goat a new low for a dow component. let's get over to jackie at the flash desk. >> it's intel trading at lows not seen since september of 2011. intel struggling with problems in the semi market. qualcomm doing well in the smartphone market. qualcomm outperforming over the last three months.
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you can see divergence there. worry in the marketplace that apple might not use intel as its chip provider for macs. >> wow. thanks a lot. when we come back, fiscal cliff fears mounting, anxiety building as we get closer and closer. can the government steer the economy away from automatic tax increases and spending cuts? morgan stanley weighs in next. corporate selloff, "skyfall" premiering today.
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some stories we're squawking about, 7:29 on west coast, 10:29 on wall street. shares of kayak soaring 26%. priceline agreeing to acquire the website. we'll have exclusive interview with priceline ceo in the next hour. mcdonald unable to shake off disappointing october sales released yesterday. the university of michigan consumer sentiment rising to its highest level in more than five years. preliminary reading for november coming in at a better than expected 84.9 up from 82.6 in october. those worries over fiscal cliff grow, how much longer will treasury secretary tim geithner stick around?
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cnbc's senior economic reporter steve liesman has more on that story. >> thank you. it's wildly expected tim geithner will leave his post there's been uncertainty about when that would occur. he's been president obama's trusted economic adviser for four years now. my information that geithner will stay through fiscal cliff and unlikely until a successor is well along the way. that means he could leave as early as january if congress confirms replacement quickly or all the way to the inauguration. what is the next treasury secretary's resume look like? i put together some ideas. first thing is, maybe the most important thing for right now, is that he's an expert in government finance and tax reform because the fiscal cliff is the first thing on the issue. has to work well with others, especially the gop. geithner's got pretty good marks in that. he has to be skilled at reaching out to the business community, given the problems president
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obama has had. he or she has to have experience in international financial diplomacy. zoom in on this here. the fmm, financial meltdown manager. who is the guy you want in the seat if we have another financial crisis? much depends on who's chosen to succeed geithner. is it an inside pick, which would mean someone who's already been confirmed by the senate? jacob lew, white house chief of staff, odds-on favorite but shortcomin shortcomings. neal wolin has done it all, liked by geithner for the job. and lael brainard has been in basil 3 and g-20. some from outside, these are tougher because you have to go through new congress. roger altman, founder and co-chairman of evercore
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partners. ralph, another name and larry fink, ceo of blackrock. too early to handicap all this but a couple other people are long shots. erskine bowles. he told me he didn't want the job too long ago. this guy here, jeffrey zients, he has acting experience, no word from white house on the timetable for making pick or come before other secretary jobs open, defense or state or perhaps all three at once. what's clear is geithner has wanted to go for a very long time. i'm told he remains fully engaged in the job until replaced. >> who gets -- steve, who gets the steve liesman endorsement? >> i know and like all these guys so it's tough for me. it would be interesting to see a woman in the job. lael brainard, she's been on the plane for a very long time.
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she has small kids, i don't want to be sexist, but that's a factor. geithner wants to go home to be with his family. >> exactly. i thought you were going to make news there but i'll come back to you later on. >> i'll give my endorsement. it's so important for the white house to know who i want, carl. >> as always. >> so critical. >> thank you, steve. >> you're welcome. >> back to the disaster that is jcpenney today. it's pared its losses. herb greenberg has been all over this name and joins us with more. >> i was going to say the company should stop pandering to wall street. if you take a look at stock, down only 3%, given that huge drop in same store sales, you can see in the conference call they basically were able to ameliorate the concern. they should stop pandering to wall street. the points i made earlier on. i was a big supporter of jcp with johnson when he came in, i had its as a prediction for 2012 as a hot stock. i got it wrong.
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you know, this stock is down 50% from its highs. ron johnson is on the analyst call today saying this is the fastest start-up in history. i would say, if it's a -- saying it's a start-up is actually positive spin for turn-around. start-up, turn-around, either way he can't know the future. he should have never given guidance. a quarter ago he had to pull all guidance because the reality of this is, transitions take forever. and if it's a startup, then, guys, start-ups are highly speculative. we know with speculative stocks, you can't predict the future. years from now we may come back and have a great laugh. as i tweeted out this morning, right now jcp is making sears look good. melissa? >> herb greenberg, thanks for that. we should point out in terms of the turn-around in the stock in today's session, jcpenney down 3.3%. smells like short covering. the short interest on the stock, high, 27% of shares outstanding are held short.
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stocks coming back slightly after a two-day selloff and morgan stanley says there are still four reasons to be bullish. greg peters, strategist for morgan stanley. a lot of people are hanging on those four points because it seems like there aren't too many reasons. one is actually fiscal cliff. >> yeah. look, the irony is that we've been talking about this all year. now it's -- now it's finally upon us. then i'm saying, okay, well, is that a reason to be bullish? it's really a timing trade more than anything else. there's still a lot of concerns we have out there. the markets feel terrible right now. investors are pushing back on us greatly. really four reasons we have is the election's over, which is an obvious point. we knew that since 1845 the election would be over at this point. that's not new news. the second is the fiscal cliff. i think we are getting a better sense. the president speaking today at 1:30. we're past politicking and maybe we'll get closer to governing. i don't know. you know, either way i think
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we'll see a patch with a plan. and then third is on the european side. we're in crisis again. pavlovian response is with crisis comes response. good time to own risk. fourth and most importantly is hurricane sandy. hurricane sandy is giving us a free pass on the data. so, you didn't see it today with jcpenney's because it's more of an idiosyncratic story but what you're seeing is from a macro and micro perspective. investors will look through the data because it's so tainted by the hurricane. that's the thesis. >> that's a huge leap of faith and investors don't often like to take leaps of faith. trust me, the data will be good in a couple months. >> and you have to combine some alternative scenarios. what if the fiscal cliff does happen, then the data doesn't
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come in stronger, right? >> absolutely. i understand all that, right? i do think -- i mean, the sea of negativity post-election just seems somewhat disingenuous to me. if you read nate silver or look at intrade, they were telling you all along the president would be re-elected. i don't understand all of a sudden the markets go bad given current administration. which, by the way, is the same administration we operated under over the past four years and returns were actually pretty favorable. i don't quite understand those dynamics but they are what they are. >> what about the idea that in the past couple of years, leading up to the t.a.r.p. vote, leading up to the debt downgrade, markets didn't price it in well enough to the point where they didn't decline precipitously in the days and weeks ahead, days and weeks before, right? >> yeah. the markets are seemingly less
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anticipa anticipa anticipateory. at the same time, these factors can't be ignored. i'm putting a little faith in our political process here which is a dangerous strategy, but i do think we're get better clarity. clarity is key. we've been operating in an uncertain skrirment fenvironmeng time. we're getting closer to more clarity. >> you sound bullish but more bullish on emerging markets. >> i am. i'm still concerned because i think the earnings picture will be weaker in 2013. this is more of a january effect pulled forward trade is what i'm discussing here. yeah, our bullishness is on the em side. we've been quite constructive on em equities. we still believe we're in this financially repressed state which means fixed income works well. if you take the election as a proxy, what we learn from the election is that the status quo is here. so, that probably is the same strategy from an investment portfolio standpoint, right? status quo.
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we're still very much in fixed income, financial repression and in em equities for better risk reward. >> i think it's interesting how a lot of analysts pinned earlier forecast on performance chase dynamics, going into the second half and the final quarter. is that dead? it feels dead. >> it feels dead to me, too. which is a positive and good sign. i think i was on the show not so long ago talking about the fourth quarter seems so out of bounds. didn't feel right given corporate concern over the fiscal cliff. that's been taken out. now we're looking past. i think once you look past, have you positive dynamics into the first quarter that could push markets higher than we expect. >> i've heard the glass half full guys but this takes the cake. >> i'm bearish to the bone so this is kind of unique for me. i'm going the other way as the markets are trading very heavy.
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but just something to look at. let's put it that way. >> good to see you again. greg peters, morgan stanley. diageo, the company behind crown royal, kettle one, making another big emerging markets play. ceo paul walsh will join us live after the break. still ahead priceline ceo jeffrey boyd will drop by and talk about his kayak acquisition, holiday travel and a lot more. [ male announcer ] this is joe woods' first day of work.
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prepared for the careers of our new economy. by 2025 we could have 20 million jobs without enough college graduates to fill them. that's why at devry university, we're teaming up with companies like cisco to help make sure everyone's ready with the know how we need for a new tomorrow. [ male announcer ] make sure america's ready. make sure you're ready. at devry.edu/knowhow. ♪ diageo striking a deal this morning. agreeing to buy 53.4% stake in india's united spirits for $2.1 billion. joining us from london, paul walsh, ceo of diageo. it's always good to see you. i appreciate your time once again. you have been on the program before and you have talked about what you call the premiumization
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acceleration in countries like india. what specifically is it going on and why are you putting your money where your mouth is now? >> well, first of all, with this transaction we get the number one position in the local spirits market in india. if you look at the indian market, it's already a big market. 6 billion u.s. dollars in sales of spirits. and it's poised to grow very attractively. good gdp growth rates forecast. and fabulous demographics. a young population. if you look at the emerging middle class, by 2025, it will move from 100 million or so today to 600 million people. so, it's a very attractive market. we've just got the number one player in that market. >> is it exclusively spirits business there or does beer have anything to do with it? >> no, beer is very much present in that market. clearly what we are looking at today is a spirits play, which
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is the backbone of our business. >> you also say there's the possibility of extending the jv to start looking at leveraging opportunities in emerging markets in africa, in asia, beyond india. is that the ultimate end game, or is this the larger chapter, this one we're looking at right here today? >> this first and foremost is about india. a vibrant, attractive market, getting the number one position. however, the partnership we're fortuning with dr. malia, he's very expert in such markets. we will explore, if we can develop this further, into markets such as africa. but that's for a later day. >> paul, we here in the united states are very concerned about what's going on with the fiscal cliff, specifically concern about what impact it will have on the consumers. we do see the stock market sort of rethinking what's going to happen from now until the end of the year. when you take a look at your market, are you expecting any
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sort of hit? are you concerned especially because the fourth quarter should be a pretty strong one for the spirits market. >> yeah, we're seeing very good trading in the u.s. and my belief is that all this will get sorted. and, therefore, i think it's kind of a moot point. you know, there is nothing fundamentally that has changed here, so i don't know why it's becoming so front of mind. i think this will get solved. our trading is very robust. we'll be fine. >> and in terms of europe, what are the trends there? >> well, europe is kind of a mixed bag. southern europe continues to come under pressure, but there are growth opportunities elsewhere in europe. we're seeing very good growth in germany. we're seeing good growth in the nordics. the uk is okay. and then have you markets such as turkey, which for us is a very exciting market. so, overall, our job is to drive growth. we've got to play the cards
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we're dealt. southern europe is tough. we've got to offset those declines with opportunities elsewhere. and that's what we're doing. >> paul, speaking of opportunities elsewhere, you continue to get data out of china that suggests that the freefall we were looking at, say, a quarter or two ago is beginning to stabilize. are you seeing that, too? >> well, we've never seen a free fall. growth rates may have tempered somewhat but we see china as a very attractive long-term market. but, actually, i think the demographics of india are arguably more attractive from a spirits point of view. >> well, that certainly explains the move you're making today. always good to have you, paul. i think cramer called you a genius early other the program today. you can always take that home with you tonight. paul walsh joining us from diageo in london. >> thank you. priceline.com buying kayak in a $1.8 billion deal. the priceline ceo joins us exclusively. that's next. first, rick santelli, what are you working on for the next big
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hour? >> today it's about this pin, rise above. santelli exchange will be looking at creative ways, thinking outside the box. maybe we'll come up with some ideas that congress, the house, the senate and even the president may consider. there's so much at stake here. but just because compromise needs to come into play doesn't mean principles have to go out the window. that and a whole lot more at the top of the hour!
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. big rally for a battery maker. you can probably guess why. let's head over to jackie deangelis. >> hay, there. bernstein is saying you have to proceed with caution on this one, telling investors not to get too excited as it has deep appropriate concerns. they downgraded the stock earlier this week, but still we're at more than 9% this week. i also want to draw your attention to chubb as well.
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it's unsure and how large rather its losses are going to be from superstorm sandy. chubb trading flat. carl. >> thank you very much, jackie deangelis. coming up next, james bonds in "skyfall." some critics are saying he's gone a little too far with corporate placement. we'll take a look next. customer erin swenson bought from us online today.
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the 23rd installment of the james bonds series hits theaters this weekend but instead of losing steam the franchise is looking stronger and perhaps more than ever. why the sky could be the limit for "skyfall." julia. >> that's absolutely right, melissa. "skyfall" is well on its way for setting a new record. it's already grossed $5 billion over its 50-year lifespan. it's drawing a 93% rating on rotten tomatoes. it's cost mgm only a report 2d $40 million and has brought in $223 million in the overseas box office. it was the biggest bond opening
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in the uk ever. "skyfall" is the first bond film to be presented in imax. opening a day earlier at higher priced theaters, we have not gotten those results in yet. but no matter what, it's going to be a windfall for sony and mgm, the studios behind it. sony is also cashing in on its music. adele's hit "skyfall." it included electronics and laptops and phones. everything from honda motorcycles to heineken beer, coke zero and, of course, omega watches. there's no official tally for how much these deals are bringing in but they're reportedly bringing in about $40 million in product placement revenue for the studios. though it's valuable, there's tons of debate ever whether all these deals are going to turn
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off james bonds fans. of course, we do expect him to be drinking a vodka martini, not a heineken beer. but it's worth mentioning james bond has featured an item for decades. when he drinks his martini, it's smirnoff and he shows off his own omega watch. >> how does that compare with what's expected at the box office and ticket revenues? >> the box office is always going to be bicker. i think it will bring in a lot. so the product placement revenue won't be as big in terms of a total number, but it is kind of pure gravy for the studio, whereas the box office you have to keep in mind the studio splits that with the movie theaters. product placement is great because not only do they get that revenue, but they also get products. so if you want a motorcycle --
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if you need ten motorcycles, they get all of that product from honda. >> well it certainly did wonders for bmw a few years ago. the reviews have been so good. 75 might be a little conservative. we'll see. thanks so much. >> i don't think all of the product placement is going to hurt it that much. >> thanks a lot, julia. here at cnbc we've been calling on our country's leaders to reach an agreement to avoid the fiscal cliff. earlier this week john boehner did the same. take a listen. >> we want you to succeed. let's challenge ourselves to find the common ground that has eluded us. let's rise above the dysfunction and do the right thing together for our country. coming up in the next hour, speaker babier will be giving a news conference live from capitol hill. we'll bring you those comments live and the president speaking in the east room at 1:00. they're calling it a statement. there will be an audience in the
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room. he might get a question. it's up to him whether or not he wants to answer it but we might know more in a come of hours than what we do now sniet could be a real market movier what he says or doesn't say as well as the countdown to when the president speaks. the nasdaq, it's higher and that's thanks in large part to the massive reversal that we've seen in shares of apple just intraday. apple is now higher by -- call it 1% or more. it's close to the session highs here. so quite a turnaround there from the earlier losses we saw in the session. and we're also seeing a turn 5ur7bd in the financials. >> transports went green relatively early on. jc penney has been pearing its losses. we'll see. a lot of people may not want to go into the statement by this president too short or too long. >> we'll see.
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that's right. >> we'll see you tonight on tv. meanwhile, if you're just tuning in, here's what you might have missed. welcome to hour three on "squawk on the street." here's what's happening so far. >> we have an incredible set of events occurring at the end of the year. i don't know who wants to weaken the economy. it sevens no one's interest. >> it would be disastrous. i mean all the programs get cut. there are things that get cut across everything and it makes us difficult to operate. >> we have to develop this as worried as we are. i still see this kind of grover norquist run, republican party, which would rather not have a tax inkreeks and take the ho -- this was a ka pipt lags downgrade, let me say that. i can't take it anymore, i can't take it anymore. i can't take it anymore.
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when you're a research department, that's what goes on. when i get up every morning, i think of cisco. >> and there's the opening bell. and european consumers are looking to stretch their euro, they're coming on line to get their loyerer prices. >> i'm putting fact in our political process here, which is dangerous but think we'll get clarity. clarity is key. hard to believe. we've almost made it to the end of the week. good morning. welcome to "squawk on the street." the dow up 22. s&p's getting p 6.5 back at 1384. a lot's going on.
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6 reporting revenue that came in. revenue coming in higher. and disney, the biggest loser on the dow, the stocks taking the biggest fall in more than a year after reporting fourth quarter sales missing estimates. declines in film revenue and ab cnet work tooising did hurt. priceline buying kayak.com for nearly $2 billion. the ceo ll join us wise. and jcp. is the penny turnaround in serious trouble here? more pain for groupon. failed to meet expectations in the quarter. we're going to discuss whether a leadership change is what they really neat to get back on track. the markets hoping for clarity. we're going to tell you about
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that. in a few moments john boehner will be speaking on the fiscal cliff. we'll bring you those comments as soon as he begins speaking. first those, a cnbc exclusive. jeff, welcome back. always good to have you. >> thanks very much. >> deals being seen -- i think being applauded pretty much across the board. how long have you had your eyes on these guys? >> well, we've been doing business with kayak for some time as an advertiser, so we've known the company well for several years. >> when did the idea of buying them start to occur to you? >> our discussions got discussed in the last couple of months and the deal got put together today.
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>> is the real upside here an international story? a domestic story? break down what you think is the best case scenario is for the next few quarters. i think they have the ability to grow their business here and overseas. because our group has such broad business internationally, i think after the closing we'll be in a good position to help them build their business overseas. >> some have pointed -- i mean in potential concerns, the notion of why would a rival of yours want to continue to tooising on kayak once this acquisition is easy. is there an answer to that? >> its's provided its advertisers with growing marketplace and a place where they can get customers with an
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attractive return on investments. >> others say it's likely to help you with various search rankings and i.t. and technology. can you talk about some of the potential upside there? >> sure. i don't think the search marketplace is a big part of our strategy here. kayak drives the marketplace and that's one of the reasons we like the brand so much. they also have a great technology, and we look forward to working with them on things like mobil, where they've really staked out a good position in the marketplace. >> let's talk about the travel season at large for the holidays and beyond. it's been reason that airlines for the hotels extremely robust going into the holiday season. but you yourself has talked relative weakness. is one going to outweigh the other? >> well, most of the priceline
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group's business is international, and i think if you look at our third quarter results, you saw a pretty good gross bookings growth coming from our european markets, so i think we've seen a stabilization there in terms of the business we're seeing in our markets. it's pretty consistent that when you get into times like thanksgiving and christmas travel is focused on a small number of days around the holiday, that prices go up and it makes great sense for people to shop and book their tickets early. >> right. so it might bring some stabilization to europe. meanwhile domestically, we just got some consumer confidence numbers about an hour ago. some of the best numbers we seen seen in five years. >> is it i got to surprise somg people. >> i don't predict whether there'll be upside surprises but
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i will say if you look at the statistics coming out of the hoe till and airline industry, the business looks pretty solid generally here in the u stace at toipt ever point in side, did it mean that it's been whetted or does it mean you might continue to go hunlding? >> we typically have been an inquisitive hunting. we're going to be focussed in the midterm making sure we're getting closed. >> congratulations on the deal, jevgs good to have you on the phone. >> thank you. >> let's get to rick santelli. before we do, i want to listen to what rick had to say about
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the fiscal cliff not too lock ago. >> just think back to the famous failed tarp vote. what happened quickly was the big stock market drop. and you know what? that is so absolutely true what happened, carl. we remembered. when the stock market started to drop, that was the motivation to do what they did in terms of the voechlt but the there was that. i think retroactive. you know, they should do it right. they should have the tax cuts expire. so with holding taxes are more. if they come with any less tax disturbance, many people would roer have a refund college to find a way to get the extra
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mone money. when it comes to compromise, there's more than going to tej is. put it on the screen. do you know what it says? it says marginal income tax rates. it says marginal income tax rates. here comes wealth. income versus wealth. why don't we have a wealth tax. i think about it. if the average income is let's say $40,000, taxinging in when it's 250 grand is disingenuous. if they link in new york, they have kids in college, their hour is under water. i'm sorry.
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that's a bad way to i go. let's add up tax fur felt. maybe your threshold is 4 million. two low? make it is two. that's the tax. make it lar for for our fire yierns. remember, compromise is a big word. use it properly. carl, back tow yo. >> have you talked to grover about this notion? i one fehr if could go allege with that? >> i'll come back to that in a bit. jcpy, is it time to start doubting the turnaround and if you all right doubt it about do it it anyway. we'll come back. and before you know it, i'm 58 years old.
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time went by very fast. it goes by too, too fast. ♪ but i would do it again in a heartbeat. [ laughs ] ♪ ♪
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welcome back to "squawk on the street." i'm jackie deangelis. the strongest stock out of the s&p. now, the sector as a whole is trading hire. earnings beating the street, rising 2 president 2%. the effective tax rate declining, and the earnings even up as margins narrowed and court earnings slipped. the street liking this one. 56/35. back over to you, carl. >> thank you, jackie. i want to take you to a quick
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shot where john boehner is speak live. we'll try to stay with him as long as we can. you've got to figure whatever he's saying, the market is extremely sensitive to. jcp experiencing a 26% fall in third quarter sales. our courtney reagan is back at hq with some numbers, courtney, that a lot of people couldn't believe. >> ouch, carl. there's not a lot of words to describe for this quarter. ron johnson and ken hannah remain as positive as ever in their presentation to the community this morning. jc penney losing 93 kreblcents share. the same-store sales falling 23%. now, with christmas just 45 days
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away, johnson says he know s everyone is excited how jc penney will survive. he said on friday, the day after thanksgiving, he'll run a sale because it's the american tradition. >> we're going to run a sale. it's going to be a doozy. we'll market it heavily and we'll have some of the lowest prices. >> beyond back friday, he'll continue to mold that pricing. they'll show many manufactured suggested price to help customers understand the price. the bad news, only 11% of the store foot pripts have been converted and they wouldn't b n
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until november 14. carl, many are wondering how long can investors really afford to wait. >> i want to take a look at some jcp and overs up. laurie, good to have you back. good morning. >> nice to be with you, carl. >> do you own any jvp and if you don't, would you? >> we accident but certainly the there's a lack of clarity. ron can't help himself. halfway through the quarter he spoke a trends were pretty similar to the prior quarter.
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>> is that a fair criticism because the strategy is not clear or maybe it is clear and it's simply not working. >> it's a combination. i can't get the numbers to add up either. he tried to look at comparable space but he's also spoken about these new dishonest being ahead of the storn. fp you look at it, these new shops, that's really just getting them back to where the production tifrltss with in space before the program started. definitely a tough number. >> we asked about cash. the general second census is
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it's fine. you've god the third quarter bind you. assuming things don't turn around. they rolled out the great shop add shops faster. they're in charge of this and they have to manage through the transformation. he's kind of giving himself a little more leeway in terms of that cass drain but he also says that next year will be a growth year, make no doubt about that. so it's talking out of both sides. he's used to saying they would have a billion dollar on cash at the owned testify quarter. now they didn't come back to repeat that. they have 500 million now. i think they've spoken about 36 months. this will be a transport concept. if they don't start to see a dramatic improvement. they're going to have dramatic
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problems. >> i aseem you mean cops of every side. it's been a very expensionive learning lesson. >> thanks, lori for being with us. we have a lot more on the fiscal cliff coming up. we'll be right back. melons!!! oh yeah!!
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would destroy nearly 700,000 job in our country. the members of our majority understand how important it is to avert the fiscal cliff. that's why the house took action earlier this year to replace the sequester with other types of cuts, and it's also why over the summer we pass add bill to extend all of the current tax rates for one year so that we had time to overhaul our tax code. and it's why i outlined a responsible path forward where we can replace the spending cuts and extend the current rates paving the way for entitlement lee form as well as tax reform with lower rates. 2013 should be the year we begin to solve our debt through tax e
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reform and entitlement reform. i suggest we avert the first cal cliff together in a manner that 2013 is finally the year that our government comes to grips with the major issue thags are facing us. this will bring jobs home and result in a stronger, healthier economy. this framework can lead to common ground and i hope the president will respond today in that same spirit. as i said on wednesday, this is an opportunity for the president to lead. this is his moment to engage the congress and work toward a solution that can pass bounlt chambers. earlier this week the prts and i had a short conversation. it was courtial.
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i thing we both understand finding it is production for our country. with that i'll be happy to answer some questions. >> thank you. [ inaudible ] when you start talking, have you seen some numbers? you said -- that it was best when everybody stuck together. do you foresee those same problems when you start talking about some of these issues? because there's already a lot of skepticism? >> when the president and i have been able to come to an agreement, there's been no problem in getting it passed here in the house. >> you outlined about tax rates going up as far as the solution with regards to the fiscal issue
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in your speech the other day, but you didn't lay out a december s deficit goal. >> clearly the deficit is a drag on our kmn and we can't continue to spend money that we don't have. i don't want to box myself in and i don't want to box anybody else in. i think that it's important for us to come to an agreement with the president, but this is his opportunity to lead. >> mr. speaker -- >> nope, nope, nope. you violated the rules. disqualified. >> what are you -- >> notably the other day you made a point of putting new revenues at least on the table. could you give us an idea, any more examples of where you're going with that or not on the table or are you talking about going after deductions? it's clear that there are a lot of loopholes in it both
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corporate and personal. it's also clear that there are all kinds of deductions, some of which make sense and some don't. by lowering rating and cleaning up the tax code, we know that we're going to get more economic growth. it will bridge more jobs to the revenue and more to the code and we know the tax code will be more efficient. it only collects 85% of what's due the government. it's clear if you have a simpler, cleaner, fairer tax code, that efficiency -- effectiveness and efficiency increases expo anyone chally. >> obviously the democrats won more. why do you have any leverage whatsoever? >> there's a republican decree
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here in the house. the american people re-elected the republican majority and i'm proud of the fact that our team in a very difficult year was able to main tands. there are a lot of races out there outfamgd but it clear we've got some work to do. i believe in responsibility, in enpowers our i people. we dream of the american dream. but when we talk about who's a party, we'll continue. >> do you plan to have veto next week on the russian trade and human rights? >> i have toance
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. >> >> it's an issue that's going to have to be addressed. sooner rather than later. >> mr. speaker, following on jake's question, it said there was an overwhelming number of americans, 60% or more who favored raising taxes on the wealthiest americans lchl you bedecide on that. >> the problem is that more than half of them are small business owners. we know from earnst & young 700,000 would be destroyed. we also know it was slow down our economy. the number one was about that.
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raising tax rates will slow down our ability to create the jobs that everyone says they want. >> mr. speaker, what are you looking for in terms of on the entitlement side? are you looking for changes in both those programs? >> listen. we're spending a trillion dollars more than what we take aimer in. we can't afford to this this. this is year ted, a there are 10,000 baby boomers just like me. this is the second year of the 25-year baby good bunnell and it's not like there's insults to
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medicare. this has to be dealt with. >> mr. speaker. no, no. i wasn't called on you. my goodness. i'm not blind. >> immigration -- >> no. the young lady here. >> thank you, mr. speaker. i just wanted to go ba to your commented about immigration i i'm not talking about a 3,000-page bill. what i'm talking about is a common sense, step by step approach, secure our borders, fix a broken immigration system. but, again, on an issue this big, the president has to lead. i think members on both sides of the aisle want to resolve this issue. the president's going to have to leave here. >> are you endorsed -- >> i'm not going to get into any
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of the details of how wow would goetz the job done. >> mr. speaker, it sounds like you're setting up the frame wachovia. but now you need to deal with the sequester, the amt, the medicare problem and you've spoken or there's this problem of a down payment. can you go into more of what you expect that to be? >> no, i would rather not do that because i don't want to limit the option i that might be available to me or to the white house. there are a lot of ways to get there. i don't want to pre clues how we move foofrmd but it's clear. it's clear that we've got to fix our broken tax system and we've got to deal with our spending
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problem. >> would you need to pay for it immediately or would that be part of a bigger deal? >> nice try. mr. speaker, does calling it tax refurn give you a better way to sell it to your caucus versus something these revenue neutral which is a mantra we've heard in the past. >> we've had this discussion over the laugh last year and a half and the president and i were attempting to deal with the problem a year 578d it fate go. you can produce revenue and put revenue on the tax system, and get i getti getting everybody back. >> does it -- >> thanks, everybody. >> and that is speaker boehner finished his q and a, putting ball squarely in the president's
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court as he's expected to speak in about an hour and a half, saying it's the president's turn to lead. not responding to the favored tax hikes on the wealthy. he says the problem with raising tax rates are that those who are affected are those with small businesses. not a definitive note in there, john, but a vote from earlier this week. >> i see this as a rather important departure. what he's talking about is additional revenue, around i think by reading between the lines of his statements together ands he statementing over the past couple of days, he's not talking about revenue from an economic growth but raising it oven the economic basis. that's the dividing line that
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democrats have been waiting for u. we'll see whether that's sustained but i don't see any principle reason why this white house would necessarily object to a revenue solution if it raised more revenue and didn't increase the rates, it seems as that's more a place for the president to go. i'm not saying he will go there. but it suggests that negotiations are potentially fruitful between two sides. >> what would the motive be if on the stay tugs basis you argue that. what could be the point of rating the rate. >> well, the white house believes and the president has made the dwumt, there ee no reason why the bush top rate couldn't be maintained.
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it would raise revenue that the government needs. that's something that's very difficult to sell to the majority of the house of representatives right now, especially a majority controls by republicans. what i'm saying is if they want the top rate, that is the people at the top income wise, if we get revenue from those people, what about that? i'm saying that ee says -- the white house could consider the basis for moving forward. don't know if he's going to agree to that. again, he's been talking for a couple of years how he was going to preclude the top rate from being extended beyond 2012. the interest isn't revenue.
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it's something that was not realistic to happen. but that became realistic, i don't think ud would be thal. >> last question, john. you talked about the potentially heavy tone with the speaker. that is a card that is still in his pocket. >>y, its's in his pocket and its in the pocket of his mem bys world would be to go and have it. the leadership knows that. think the leadership knows that they would go into a discussion of the debts limit with a lit mfrl flex lktd do negotiate d senate and the bhoous whoos they toll in 2011.
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>> john preev yates that. we were up about 34. dow's 20u7b. there use new data on food supply. we'll find out what it means for components afternoon the break.
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we want to get to marry thompson with what is moving. hey, mair. >> hey, there, carl. they've certainly looked better than they have. tech looks very strong. the nasdaq is up. there's some clarification as to when they start to meet. i guess not clarification but a delay as to when they are to start a transition period to comply with it which seems to be giving a lift to some of the regional stocks as well. of course, we had the decent consumer sentiment numbers. first of all, let's take a look. the federal reserve saying they'll not have to take a look at the designation period. it was expect thad they had to begin comply by january 1st of 2013 but they've received a lot of comment periods, so they've pushed it off. also, of course, we're keeping watch on insurers saying, you know what?
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it's going to suspend its buyback. it's given a list to the insurer's stock. it's taken aggressive steps and in fact all of the insures look stronger today. travelers actually reversing a further decline. disney, of course, it's a lag art with the due. that's putting pressure on its stock and also homebuilders are under pressure as well in today's session. last we want to touch on utilities. they've been hurt by the fallout from sandy and the costs that will be incurred there. keep in mind these are dividend stocks. they could become less attractive because the taxes on dividends could increase. that's the story right now. >> we'll come back to you a little later on. let's look at some high yield bomds today rick. >> absolutely. you know, being an ex-trader, when things get questionable --
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and believe me, everything about this morning underscores question b89, is it time to take off some of the big winners? >> you're going to put a question on it and whether they'll be liquidated. >> i agree. if you look at the blackrock high yield b-rated mutual fund, it's produced almost a 14% return this year. when you compare that to the s&p 500 which is up 9.5, and treasury ten-years, the risk free at 5%. you can see you've done fabulously with that. >> it isn't only those issues. many mutual funds might thing it's time to take money off the table. we had some biggish use numbers. >> you have to consider what
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smart hedge fund managers do is they take profits on their big winners at the end of the year and invest in assets way at the end. the shanghai composite index is doubt 18%. >> let's say the fiscal cliff gets decided. it doesn't hurt too bad. capital gains aren't changed much. is this a position you would think would be put back on? is high yield tow to stay ads an outperforming sector? >> i think it's fine. but if you look at the particular return it's only 5point 8%. if the economy were to go, they would suffer. >> viewers forecast you've never traded a high yield, if we think the stock market is in a corrective mode, if we think there's another 15, 20% down, what you're saying is the high
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medias are going to spread dramatically. >> it's always a pleasure. back to you. >> i want to get over to jackie deangelis. >> watching terms of molycorp, earth prices were an issue and higher production costs. they are traded now. they're down about 8%, 5% at this point. by again not great news for molycorp back to you. >> thank you. how did this summer's drought affect beef, corn, grain, and other commodities? jane wells is live from athens, texas, with more on that. morning, jane. >> hi, carl. i heard the washington press conference in one ear, the cattle going in the over. hard to tell which is which.
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>> they're going to sell cattle. >> good morning, sir. just walk right through. while the usda says the corp crop is going to be the smallest, still better than they thought it wu going to be and better than many analysts thought. they announced it's going to grow next year thanks mostly to record high foreign output even though it was up. prices are supposed to come down. similar story with soybeans. better yeeltdinger the day vl billion down. ranchers sold off a lot of animals early bus they can't afford to feed them. >> what you're going to see volume-wise is due to the kind of year.
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typically these guys would run well over 2,000 cattle. >> all right. in today's report the cattle prices have both risen. the beef is disappearing a little. you can see total u.s. beef production is going down starting with a back drought in texas last year. look at what the usda says that are do the prices. steer prices averaged $1.16 a year neck next year. parkers are severely in the red. it could be the worst year they'they have ever had. there jane, tell them you're doing tv.
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>> this is texas. when we come back, why a leadership change might be the thing they need to get back on track. we're back after a short break.
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up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. coming up at the top of the hour, a special edition of
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halftime. the markets and the fiscal cliff. can a deal be reach and what do investors need to hear from the president today? they tell us where to invest right now. and whitney tilson and others. market placers on opposite sides of the i'll go head to head to find solutions. carl, we'll see you in about ten minutes. >> sounds good. thanks, scott. shares of groupon sliding. what could this company possibly do now to turn things around for investors? joining me this morning -- author of groupon's biggest deal ever. je jents, good morning. >> good morning, carl. >> i wonder if this is the straw is that broke the camel's back.
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>> he said, at least it's not zin zynga. a year ago i would not have sold a book. you know, the goods business has been around for a long time. roughly equal to the daily deals so, they're scrambling to get revenue in from that. but the core business really seems to be slipping. straw, camel's back, seems like it. >> when they change tvs or host, you'd better hope he's better. >> first of all, we endorse his book. basically groupon has turned into an overstock.com.
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basically they're trading dollars for dimes. >> right. >> the margin on a third-party deal is 87%, the company said. the margins for selling stuff is 12%. so it's a crumbier business. >> it sounds like a model issue. >> at a certain point and i've been around business as well you have. at a certain point, perceptions of a company both internally and externally have to change. there's a couple ways to do that. you can get a marquis investor, launch a partnership. and, of course, a quick and dirty way is to change leaderships. it seems that we're lnl getting to the point what is this company and who leads it is a very legitimate question. >> saying no to that deal, it
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does strike to the heart of leadership's judgment, does it not? leadership's arrogance? i don't know what word you want to use. >> yeah. they took a lot of money off the table and they're all fine inside. but, yes, to your point. it's one of the last bullets in the gun. i think it more is a model problem. there's some deal fatigue that's setting in. they're clearly having trouble opening e-mails than the way they used to and they're banging a lot. jason childs said in the interview, we didn't think the goods businesswise going to grow quite as fast as it has, but it's overstock. they need to figure something out. they have a lot of smart people but they're pedaling as fast as they can. >> i make another point of that.
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as they disclosed in the conference call, the revenues are down 23%. it's not working. it's clearly -- i mean it's obvious that groupon as a business is not working and it has to move from taking in dollars to taking in dimes. >> frank, as someone who's written the book on the company, i love saying that, are you starting to frame the end game for this company in your head? what does it look like? >> to me it looks like the best-case scenario is it a going concern but nowhere near the scale they thought it without be. it plods along. it's not a high-growth company.
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it's not cool to have a groupon anymore. it used to be, you'd go with your friends and buy a groupon. now it's as cool as clipping it out of a newspaper and when you loose that, it's kind of the last of the a business. >> living social, they've written that down. amazon is so big and gotten so powerful, of course -- >> chump change. >> this is relatively chump change. i will say for groupon going forward. they brought down the marketing, spent a lot in the last quarter. you can see them saying that. they've got $1.2 billion in cash. they can become a different, less sexy kind of business. >> what about taking it private again? >> that wouldn't be too hard given the valuation today. basically what kayak was worth
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when priceline took it. guys, thanks so much. up next, how some of the bigge biggest feathered. cop super staples and discretionary are the worst performers. we'll be right back. i'm a conservative investor. i invest in what i know. i turned 65 last week. i'm getting married. planning a life. there are risks, sure. but, there's no reward without it. i want to be prepared for the long haul. i see a world bursting with opportunities. india, china, brazil, ishares, small-caps, large-caps, ishares. industrials. low cost. every dollar counts. ishares. income. dividends. bonds. i like bonds. ishares. commodities. diversification. choices. my own ideas. ishares. i want to use the same stuff the big guys use. ishares. 9 out of 10 large, professional investors choose ishares for their etfs.
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. month of october, you can probably guess was a rough one for the markets. can the same be said for hedge funds giants? r.k. kelly has some details on how those funds performed or survived. kate? >> many of them kept their bets pretty modest bus they were waiting to see whether we kept them modest. a number of the major macrofunds are in more solid shape that prompted one long-time trader louis moore bacon to looesh it entirely. and tutor b.b.i and others were
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also up more than 2% for the year. all these guys, by the way, are beating the average make crow fund is down more than a percentage point. but the big winner here might be point state capital. stanley druckenmiller's hedge fund. pointstate is up to nearly 9%. one has nearly found its foots since the new person was put in place. that's zack schreiber. >> but last month the s&p gave back some territory as did green light capital manager dave ien horde. he made waves earlier this month. at the same time he was